The Euro Hits 3yrs High amid Expectation of Tighter Policy
By: Eddy Peng Jan 16, 2018
The euro advanced a fourth straight day to a three-year high on Monday amid increased optimism around growth buoyed market expectations of tighter monetary policy from European Central Bank, and meanwhile the chance of an agreement for a coalition government in Germany boosted confidence in the continent.
The EUR/USD surged for the most recent days, with climbing roughly 0.57 percent to end up at $1.22612, a price last seen at the beginning of 2015, just before the ECB first announced its government bond purchase program.
On the daily chart with the MACD applied, it is gaining in an upside momentum and the highs of the indicator are moving higher, corresponding to increased prices of the pair. It has been showing that the price will keep its current moment until you can see a reversal from the MACD.
In regard of the Relative Strength Index (RSI) employed as well, increased pair value comes with an uptrend RSI, although it’s shown overbought currently. In the event of its retreat to 70 or even lower than that, investors should watch out for some short positions. In addition, the Sept. 8’s high could be seen as a support level for its pullback.
With the world in general and Europe in particular showing signs of sustained economic growth, the ECB started to consider the withdrawal of current stimulus, and the euro has been in a rapid pace of growth since investors are now pricing in the potential rate hike around the European area.
Meanwhile the euro has been also driven by optimism that the German government is moving towards an agreement for a coalition government. German Chancellor Angela Merkel’s CDU party and the Social Democrats (SPD) are moving towards formal coalition talks, soothing concerns around Europe’s largest economy.
Figure 1: EURUSD Daily
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